Not Your Mother's Microfinance

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Forward-thinking small business owners across the developing world are turning to the online space as an alternative source of small business loans.


Duncan Chege is someone who sees possibilities before they become reality. In 2009, convinced that information technology is the key to the future, he left a secure job as an accountant with a bank in Kenya to launch his own cybercafe business. In response to customer demand, he began to provide computer training in addition to browsing and printing services.

Mr. Chege's computer school and cybercafe business is located at the edge of Nairobi's Mukuru slum, a place notorious for its hideous poverty. Open sewers line the mud streets and residents cover them as best they can with pieces of wood. Police and criminals alike extort bribes. Parents unable to compile sufficient cash for school fees have cobbled together dozens of makeshift academies, where bright-eyed pupils crammed into sheet-metal classrooms sit on dirt floors and recite the alphabet. The ambition for a better future is palpable here.

Computer training has become the bedrock of Mr. Chege's business. His customers and students are the youth of the neighborhood, many of whom are employed as day laborers, handling cargo at the nearby airport. With knowledge of computers, they can qualify for better jobs, such as export agents for international shipping companies, and administrative staff for stores and service companies. Mr. Chege estimates that while day laborers earn on average $2.50 for a full day's work or about $50 per month assuming work is available every day, the same individuals who work as export agents or administrative staff earn $200 to $300 per month. And the youth aspire to more than a step up in income, Mr. Chege explains. Working at a job that requires specialized knowledge makes one a "professional" - someone who earns a living from one's unique qualifications, which grow and advance throughout one's career.

Mr. Chege offers certified courses in subjects ranging from introductory internet, typing and Microsoft applications to web design and database management. He makes the already-low tuition cost even more affordable by accepting payment in installments. Many of his students take advantage of the opportunity, coming in to study for several hours each night after a full day of manual labor.

When he first opened his cybercafe, Mr. Chege only had enough computers to accommodate three students at once, which allowed him to enroll no more than six students at a time. He could not get financing to buy more computers, because the banks that provide business loans require savings of over a thousand dollars as a security deposit.

Then Mr. Chege heard about a new way to raise small business loans online through a website called Zidisha Microfinance. Zidisha is a US nonprofit organization that allows web-savvy individuals in developing countries to raise small loans at low interest rates from individual investors worldwide. Lenders can contribute as little as one dollar to an entrepreneur of their choice, and correspond directly with that entrepreneur through an online comment forum as the loan is repaid. Unlike other microfinance fundraising websites, Zidisha does not work with local intermediary banks to manage the loans. Instead, it operates an eBay-style platform that lets lenders and borrowers transact directly.

Mr. Chege created a Facebook-like profile on the website, and then posted a loan application. It was funded and the cash disbursed to him through electronic transfer in a matter of days. He used his first Zidisha loan to purchase more computers, which allowed him to increase his student enrollment capacity - and revenue - more than fourfold. He used a larger second loan to purchase more computers and also a photo-quality printer, which has already paid for itself in revenue from neighborhood residents who need passport-sized photos for job applications and government documents.

"When I see this I thank Zidisha for its effort since now many youths can be able to get knowledge and improve on their lives... Most of them have been shut off because of inability to pay," Mr. Chege says with conviction. "We are demystifying computers. They are not only for rich people. With computers, one is able to communicate, to Google and browse to get information... Life will never be the same."

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You may read more about Mr. Chege in his Zidisha Microfinance profile page.

To learn more about Zidisha, check our our website at You may find many more borrower stories at our P2P Microfinance blog.

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